This text was published in Education, Culture and
Modernisation: Contributions to the First International
Summer School "Adult Education, Culture and Societal
Change", Anogia/Crete 1994, ed. by Peter Alheit et al. (Roskilde,
Denmark: Adult Education Research Group, Roskilde
University Centre, 1995)

The crisis of the growth economy, the withering away of the
nation-state and the community-based society

TAKIS FOTOPOULOS

I think that today very few people -if any- will attempt to
challenge the hypothesis that contemporary society is
undergoing a profound and widespread crisis. A crisis that
puts into question not just the political, economic, social
and ecological structures that came into being with the rise
of the market economy, but also the actual
values that sustained these structures and particularly the
post-Enlightenment meaning of Progress. It is therefore not
just the state-socialist society that has entered a state of
terminal crisis, as manifested by the collapse of "actually
existing socialism" in the East. The presently dominant
market society, despite the claims made by its ideologues,
is also in a state of serious structural crisis. Therefore,
one might reasonably assume that the very type of economy
and society that emerged in the aftermath of the Industrial
Revolution, what we may call "the growth economy",
is in a state of crisis.

I would like to consider three main issues which -to my
mind- are the crucial issues in any discussion today about
social change. These issues can be put in terms of three
questions:

First,
is there a common cause for the crisis of the "growth
economy" in its capitalist and socialist/ social-democratic
versions?

Second,
what are the dominant trends of social change at present and
what are the chances - if these trends persist- of
overcoming the crisis of the growth economy?

Third,
should we create alternative forms of social organisation in
order to overcome the crisis?

A. The crisis of the growth economy

Following a common classification[1]
of the models of development and social change we may
distinguish between :

a)
the"capitalist growth" model that
emphasises capital investment and growth in the GNP through
a process of marketizing the economy ―today's dominant
model,

b)
the "social equity" model that emphasises fair
distribution of resources and rights through socialist
statism ―a model that has been collapsing for the past 15
years or so, and

c)
the "participatory" model that emphasises the
activation of creative social energy at the grass roots
level ―a model that seems rising at present.

I would argue that the first two models, in fact, belong to
the same "growth economy" that historically developed out of
the industrial revolution in Europe. Furthermore, another
common characteristic of the first two models that
differentiates them from the third is that both are
centralised and associated with top-down power structures,
in contrast to the participatory model which presupposes the
dispersion of power and -in its ideal form- the elimination
of power relations themselves.

But, first, let me explain the terminology I use and in
particular the meaning of the terms market economy, growth
economy and marketization. By "market economy"
I do not just mean an economy where part of the product is
bought and sold in the market. It can easily be shown that,
although markets have existed for a very long time, the
market economy, as an economic and social system , is a new
phenomenon, which first emerged at a specific place (Europe)
and time (some two centuries ago)[2].
So, by "market economy" I mean the self-regulating system in
which the fundamental economic problems (what,how, and for whom to produce)
tend to be solved "automatically" through the price
mechanism, i.e. through individual decisions, rather than
through some process of social decision-making..

The emergence of the market economy set in motion two
parallel processes that have since characterised social,
political, economic and ecological change. The first is what
we may call the marketization process and the
second is the process that has led to the emergence of what
we may call the growth economy, i.e. the
economy founded on the partial (at least) identification of
Progress with the continual development of the forces of
production. The reasons why the emergence of
the market economy was bound to set in motion these two
processes can easily be explained at the micro-economic
level. The fact that, at the time of the arrival of the
Industrial Revolution, mechanized production had to be
introduced in a commercial society where the means of
production were privately controlled had very important
implications. It meant that those controlling the means of
production, in order to survive competition, had to ensure:

First, the free flow of labour and land at the minimal
cost. However, under conditions of private control of
production, this flow is an inverse function of the social
controls on the market. Thus, the more effective the social
controls on the market, and in particular on the market for
the "factors of production" (labour, capital, land), the
more difficult is to ensure their free flow at the minimal
cost. Therefore, historically, those having private control
of the means of production have always directed their
efforts towards further marketizing the
economy, i.e. minimizing the social controls on the market.
The marketization process is therefore a
historical process that transformed the socially controlled
economies of the past into the market economy of the
present.

Second, they had to ensure a continual flow of investments
into new techniques, methods of production and products,
i.e. they had to ensure continual growth (this
logic was aptly expressed by the motto "grow or die"[3]).
Therefore, it is not a coincidence that, as a modern
treatise on growth puts it, "the modern idea of growth was
formulated about four centuries ago in Europe when the
economy and the society began to separate[4]".

So, the two major historical processes, marketization and
growth, constitute the fundamental components of the new
system, the market economy. But, let us examine in some more
detail these two components and their social and ideological
implications.

As regards marketization first, it can be shown[5]
that, since the emergence of the market economy, there has
been a definite long-term trend to minimise the social
controls on the market. The rise in this century of what I
will call statism, in other words, the period of
active state control of the economy and interference with
the self-regulating mechanism of the market, was a
historically brief interlude to the process of marketization.
The statist phase of this process lasted for only
about half a century and was followed by the present rolling
back of state control over the economy (I refer here to
macro-economic control of the economy, i.e. control of the
level of output, investment, employment and so on) within
the framework of the neoliberal consensus[6].
In particular, statism, in its Western social democratic
form, represented a doomed attempt from the start to set
effective social constraints on the process of marketization.
This implies that the project to enhance the civil
society, which is proposed by some currents within the
Left today, may be just another dream: the marketization
process, within the capitalist institutional framework, has
proved irreversible. In other words, once a market economy
is established, its own grow-or-die dynamic tends to
undermine any serious effort to create self-protective
mechanisms for society against the hegemony of the market
and transforms society itself into a market society.

Second, as regards growth, we have to notice in advance that
economic growth was not just the inevitable outcome
of the workings of the market economy at the
micro-economic level. Growth was, also, the selected
objective of the centrally planned economy at the
macro-economic level. Thus, whereas the first component of
the market economy ―the marketization process― had divided
the intelligentsia of the industrial era and led to the two
major theoretical and political movements, liberalism
and socialism, no similar divide had arisen
with respect to the second component, i.e. economic growth.
From Adam Smith[7]
to Karl Marx[8],
the fundamental problem was how humankind would maximize
growth, with the help of Science and its technological
applications that had created ―for the first time in
History― the possibility for an effective attempt to
dominate Nature at a mass scale. Therefore, growth became a
central imaginary signification, to use Castoriadis's
terminology[9],
for both capitalism and socialist statism.

The growth ideology, i.e. the ideology that
was founded on the social imaginary signification that "the
unlimited growth of production and of the productive forces
is in fact the central objective of human existence"[10],
and the implied ideology of domination over Nature, became
dominant. Thus, the growth ideology complements the
liberal ideology in existing capitalism and the
socialist ideology in the ex-socialist countries. In
this sense, the growth ideology constitutes the ultimate
ideological foundation for both systems, despite the
significant differences in economic structures and the
hierarchical patterns of concentration of power.
Furthermore, the growth ideology plays the role of the
"ideology in the last instance", in the sense that it
determines which ideology will be dominant at the end. This
is why the economic failure of "actually existing socialism"
to create a Western-type consumer society was the main
reason that had led to its collapse and the consequent decay
of the socialist ideology, for the benefit of the now
dominant liberal ideology.

So, the growth economy became a central
liberal andsocialist objective. Thus, growth
became the main objective not just of social democracy that
merely aimed ―in the postwar period at least― at enhancing
social controls on the market, but also of the ruling elites
of "actually existing socialism". This, despite the
proclaimed effort in the East to substitute central planning
for the market economy and the fact that growth did not
inevitably follow from the dynamics of the Planning system
itself, as it was the case with the market economy. The
result was the formation of a world growth economy
that took the form of either a capitalist growth
economy, where the basic economic decisions were
taken through the price mechanism, or of a socialist[11]
growth economy, where most of the corresponding
decisions were taken through the central planning mechanism.
Therefore, under the "capitalist growth economy" label we
may classify the Western postwar economic structures, which
expressed the social-democratic consensus, as well as
today's economic structures, which represent the present
neoliberal consensus. By the same token, we may classify
under the "socialist growth economy" label the pre-1989
economic structures in the East, i.e. the countries of
"actually existing socialism".

Today, it is obvious that the world growth economy, in both
its capitalist and socialist versions, has entered a state
of fundamental crisis. Thus, on the one hand, we have just
seen the actual collapse of actually existing socialism- a
fact that marked the end of the "socialist" version of the
growth economy. On the other hand, the crisis of its
capitalist version becomes apparent by its dismal failure to
become universal. A clear indication of this failure is the
fact that today ―almost half a century since the adoption of
the growth economy model by every country in the world―
over 78% of world output, according to the latest World Bank
Report, is produced, and 75% of world exports are generated,
in a few countries of the North, where only 15% of the world
population lives[12].
If we add to this the serious ecological crisis that is
directly related to the emergence of the growth economy ―not
to mention the broader social crisis represented, for
instance, by the explosion of crime[13],
drug abuse etc.― then the crisis of the growth economy is
apparent.

Could we trace any common cause in the failure of the growth
economy, in both its capitalist and socialist versions? To
my mind, there is a definite common cause, which can be
expressed in terms of a basic structural characteristic of
the growth economy: concentration of power, economic and
political power. Thus, concentration of economic power,
effected either through the automatic market mechanism and
taking the form of accumulation of income and wealth and
consequently of purchasing power in "actually existing
capitalism", or through the concentration of political
control over the planning process in "actually existing
socialism", constitutes a basic characteristic of the growth
economy. Therefore, what differentiates the two types of
growth economy is the way in which the concentration of
economic power is realised. From this viewpoint, the
institutions through which the ownership and allocation of
economic resources are organised, in both the capitalist and
the socialist growth economy, play a crucial role.

Thus, first, as far as the forms of ownership of economic
resources are concerned, both the private-capitalist and the
state-socialist forms of ownership lead to the pursuit of
partial interests. This is because, in both cases, the
form of ownership assigns to a minority the right to control
the production process: either directly, through
private ownership, which gives a minority the right to
control the means of production (capitalism), or
indirectly, through state ownership, which
assigns a similar right to the bureaucratic elite in control
of the planning mechanism ("actually existing socialism").

Second, as far as the mechanism for resource allocation is
concerned, both the market mechanism and the planning
mechanism result in establishing a few in privileged
positions, at the expense of the majority. In the market
mechanism, this is brought about automatically, through the
unequal distribution of income that results from the
mechanism's functioning, while in central planning this is
accomplished through the institutionalisation of various
privileges in favour of the bureaucratic elite.

But, let us see the link between concentration and the
generalised crisis of the growth economy. As far as the
crisis of the socialist version of the growth economy is
concerned, one may argue that the main cause of the system's
inefficiency, that led to the collapse of "actually existing
socialism", was the absence, first, of political democracy
and, second, of self-management of the production units,
i.e. the lack of workers' participation in the
decision-making process[14].
This lack of participation, combined with the lack of the
usual capitalist economic incentives (consumerism and the
threat of unemployment) implied the total lack of work
incentives and, inevitably, led to the alienation of direct
producers. The socialist ideological incentives,
which the bureaucratic elite tried to create in place of the
economic ones did not have, of course, any chance to succeed
in a system characterised by the fundamental contradiction
between an ideology based upon the principles of equality
and social justice and the reality of a blatantly unequal
distribution of economic and political power.

In my opinion, the fundamental reason for the historic
failure of "actually existing socialism" (and similar
arguments could be put forward about the collapse of social
democracy) lies in its attempt to merge two incompatible
elements: the "growth element" that expressed the
logic of the market economy, with the "social equity
element" that expressed socialist ethics. Thus, whereas
the growth element implies the concentration of economic
power, the social equity element is inherently linked to the
dispersion of economic power and to equality. One could
therefore argue that the attempt by socialist statism to
create a socialist growth economy, in order to make the
benefits of growth accessible to everyone and to lend
universal meaning to Progress ―which was identified with
growth―, was bound to fail, because of its disregard of the
fundamental interdependence between growth and concentration
of economic power.

Moreover, the attempt to merge the growth element with the
social justice element created a fundamental incompatibility
between the ends and means. Thus, whereas the capitalist
growth economy was the inevitable consequence of the market
economy and, as a result, no question of incompatibility
could arise between the means (market economy) and the end
(growth economy), in the case of socialist statism, the end
(growth economy) was not compatible with the means
(social-democratic statism/ central planning). In fact, the
greater the degree of statism (as in the case of central
planning), the greater the incompatibility between the means
and ends and, therefore, the system's inefficiency.

As far now as the crisis of the capitalist version of the
growth economy is concerned, contrary to the view, still
held by some, that there are natural tendencies
leading to a decentralized society, it can be shown that
there is a long-term trend within the market economy leading
to continual concentration of economic power, even when this
trend is accompanied by a simultaneous physical
decentralization of the production process, as happens
today. This increasing concentration can be shown at both
the inter-country macro-economic level, and at the
inter-company micro-economic level.[15]

However, both the concentration of economic power, and the
consequent ecological disintegration, are not simply
consequences of the establishment of the growth economy;
they are, also, fundamental preconditions for its
reproduction. Thus, just as the continuation of growth and
marketization is not possible without the further plundering
of Nature, the reproduction of the growth economy itself is
equally impossible without the further concentration of
economic power. For, it is precisely concentration, in the
form of huge inequalities in the distribution of world
income, which makes the reproduction of the growth economy
possible: it is simply physicallyimpossible for the
wasteful consumption standards, which are today enjoyed by
high and middle social strata in the North and the elite in
the South, to be universalized and enjoyed by the world
population.

Thus, the decisive element in the present crisis of the
capitalist growth economy consists in the fact that the
system of market economy is not inherently capable of
transforming the market economy of the South into a
self-sustaining growth economy, similar to the one already
established in the North. This is shown by the fact that the
gap between North and South has widened rapidly since the
start of the peripheral marketization process, i.e. since
the market economy of the former has begun to penetrate the
traditional economies of the latter.[16]
This inherent incapacity of the North to create
self-sustaining consumer societies in the South becomes even
more obvious when we allow for the fact that the earth's
natural resources simply do not suffice for the standards of
living enjoyed today by the privileged in the North to be
universalised.

In other words, there is an absolute natural barrier that
makes the globalization of the growth economy of the North
impossible. If we assume, for example, that the world
population rises in the next century to 11 billion ―a
reasonable estimate on the basis of presently available
data―
then, for the inhabitants of our planet to reach the
per capita energy use rates that those living in the rich
countries enjoy now, world energy production would have to
be eight times as great as it is at present (or twelve times
as great for everybody to enjoy the US consumption standards[17]).
But, on the basis of "existing estimates of all potentially
recoverable mineral and energy resources (including all the
deposits we are ever likely to find)...there is no chance
that everybody in the world can rise to anywhere near the
per capita use rates that the few in rich countries enjoy
now...nor is there any foreseeable way of deriving such
enormous quantities of energy from alternative sources such
as the sun, wind or tides".[18]

A second basic element of the crisis of the growth economy
is the ongoing ecological destruction, as a result of the
growth-induced exhaustion of available natural resources, not just the non-renewable resources (mineral stocks etc.)
but also, and particularly, the renewable ones (arable land,
forests, etc.). The growth ideology, shared by both the
capitalist and the socialist versions of the growth economy,
can also account for the fact that both types of the growth
economy share a similar environmental degradation. Thus, to
the extent that the essentially economic character of the
present concentration of power cannot be simply reduced to
capitalist production relations, as Marxists contend, to a
similar extent, the ecological crisis itself cannot be
merely reduced to capitalist relations and conditions of
production, as eco-Marxists[19]
maintain. It is, anyway, evident that an analysis of the
ecological crisis on the basis of capitalist production
relations fails to explain the presence of an even more
serious ecological crisis in the countries of "actually
existing socialism", despite the absence there of capitalist
production relations. Thus, just as it would be wrong to
attribute the ecological crisis merely to the growth
ideology (as the environmentalists and various "realos"
within the Green movement do, disregarding the institutional
framework of power relations), it would be equally wrong to
impute the crisis exclusively to capitalist production
conditions (as eco-Marxists are trying to do, disregarding
the significance of the growth ideology on the theory and
practice of socialist statism).

In fact, in order to provide an adequate interpretation of
the ecological crisis, we should refer not just to the
capitalist production relations, but to the power relations that result from the
concentration of power and the implied idea of dominating
Nature.[20]
We should therefore begin with the historical factors that
led to contemporary hierarchical society ―in which the
elite draws its power mainly from the concentration of
economic power― and continue with an attempt to interpret
the crisis in the context of the institutional framework of
the capitalist and the socialist growth economy
respectively. Such an interpretation could show that the
ecological crisis is directly related to the principle of
economic efficiency, which constitutes a basic intermediate
objective for the maximization of growth in both types of
the growth economy. This principle is, in both cases,
defined by criteria which do not take into consideration the
social and ecological cost of production. Thus, those in
(private or state) control of the means of production,
design the technology and production methods in a way that,
effectively, disregards the ecological effects of growth,
which, for them, constitute just part of the "external" cost
of production.

As regards the significance of the institutional framework
in particular, in the case of the socialist growth economy,
central planners could, in theory, take ecological factors
into account in making their decisions; however, in
practice, this would imply further lagging behind in the
growth race with the capitalist growth economy and a
significant worsening in the competitiveness of their export
sector. On the other hand, in the case of the capitalist
growth economy, those controlling the means of production
have to aim at the minimization of social controls on the
market for "land" (i.e. at the enhancement of the
marketization process that commodifies the
environment) in order to secure the free flow of land's
goods and services,

Concentration of economic power is not, of course, a new
phenomenon. In all hierarchical societies, some
concentration of wealth has always accompanied the
concentration of political and military power in the hands
of the various elites, ―a fact usually "justified" through
a system of social rules based upon religion. The new
element in the growth economy is the fact that the
reproduction of the social system itself, and of the power
of the elite controlling it, crucially depends on the
realisation of growth, which, in turn, is "justified"
through its identification with Progress. However, the
identification (in both systems) of Progress with economic
growth entails the need for a more extensive division of
labour, specialization, and exploitation of comparative
advantages. In other words, it entails the need for a
departure from the principle of self-reliance, a fact that
has considerable repercussions at the economic level
(unemployment, poverty, economic crises in capitalism and
economic irrationalism in socialism can all be traced back
to this fact), the cultural level (disintegration of social
ties and values), the ecological level and, naturally, the
general social level (drastic restriction of individual and
social autonomy).[21]

So, to conclude with the answer to the first question, I
think that the fundamental contradiction of the capitalist
growth economy is that the present huge and rising
concentration of economic power ―a concentration that
implies a widening gap between North and South, as
well as within the North and the South, i.e. between
privileged and underprivileged social strata―
is not only a
crucial element of the crisis, but it constitutes also a
fundamental precondition for the reproduction of the growth
economy. This fact means that the basic tenet of the growth
ideology, that the living standards enjoyed today by a
privileged few could be universalised, is just another
utopian dream.

B. The dominant trends of social change today

Let us now come to the second question concerning the
presently dominant trends of social change and the chances ―if these trends persist―
of overcoming the crisis of the
growth economy.

Two years ago Riccardo Petrella, director of the Forecasting
and Assessment of Science and Technology division of the
European Community, wrote in an editorial piece in the
Toronto Star:[22]

The new order taking shape in the world today is not the one
imagined by obsolete statesmen of the Cold War era. Rather
than nation-states weighing in on a new global balance of
power, a hi-tech archipelago of affluent, hyper-developed
city-regions is evolving amid a sea of impoverished society.
These city regions are actively linked together by
transnational business firms which, in their ceaseless
pursuit of new customers, are creating new networks that
bypass the traditional nation-state framework... It thus
appears that the real decision-making powers of the future
will be a network of transnational companies in alliance with
city-regional governments... Today's global economy is
principally organised through a system of some 30
mega-cities that are the active nodes of the world market.

The basic conclusion that we may derive from the above
statement is that the nation-state is withering away and is
being replaced by a network of transnational corporations
and city-regions. I will make the hypothesis that today's
decline of the nation-state, which is particularly obvious
within the European Community ―that
is, the very place where the nation-state historically
emerged―
is closely
linked to the present internationalised phase of what I
called the marketization process. I shall assume
further that the present nationalist conflicts in Eastern
Europe represent a transitional phenomenon marking the full
integration of the countries concerned into the world
capitalist market. In other words, these conflicts represent
an earlier phase in the marketization process ―a process
that was partially interrupted in these countries by the
advent of "actually existing socialism". But, if nationalist
conflicts in Eastern Europe might reasonably be assumed
transitional, it will be hard to make a similar assumption
about the rise in Western Europe of neo-racism, which could
be traced to the structural changes I described above.
Thus, as the void created by the decline of statism has not
been filled by a process that really empowers communities,
the same marketization process that has led to the present
decay of communities and community values, the drastic rise
in unemployment and the decline of the welfare state has,
also, led to the present flourishing of neo-racism.

But, why the nation-state is withering away within the above
described process of marketization? To answer this question
we have to go back to the pre-war period when, during the
Great Depression in the thirties, two different models of
statism developed in the West. The Nazi form of statism
which, mainly due to political and military considerations,
was of a "nationalist" character and the Anglo-American
form of statism, which was much more internationalist.[23]
The former was to find an inglorious end under the ruins of
the Third Reich, whereas the latter flourished for another
30 years or so after the end of the war and, in fact, set
the foundations for the present internationalised phase of
the marketization process that is associated with the
neoliberal consensus.

Thus, despite the rapid expansion of statism in the
immediate post-war period, the growing internationalisation
of the market economy, as a result of its grow-or-die
dynamic, was also actively encouraged by the advanced
capitalist countries, both at the world level (GATT rounds
of tariff reductions) and at the regional level (European
Economic Community [EEC], European Free Trade Association
[EFTA]). The old nationalist rivalries that characterised
the first half of the twentieth century and led to two world
wars were swiftly overcome, in view of the expansion of
"actually existing socialism" and the flourishing of
national liberation movements in the Third World. Thus,
commercial rivalries between major capitalist nations were
replaced by a rapid expansion of trade (mainly between
themselves) so that, by the early 1970s, one-sixth of
manufacturing goods consumed in Europe were imported from
abroad[24].
Since then, the internationalisation of the economy has
accelerated further[25].

However, growing internationalisation implies that the
growth of the market economy today relies increasingly on
the expansion of the world market rather than on that of the
domestic market, as before. This is a fact that has very
significant implications with regard to the state's economic
role. Thus, as the accumulation of capital in today's
internationalised market economy depends much more than
before on the world market, the state's role in enhancing
domestic demand is not as important as it used to be in the
past. At present, competitiveness plays a much more
significant role with respect to accumulation and economic
growth than direct expansion of domestic demand through
government spending. Under conditions of free trade,
ccompetitiveness
is crucial not only with respect to an increasingly
export-led growth but also with respect to import
penetration that could have serious repercussions on the
levels of domestic business activity and unemployment. In
this context, the prevailing conditions on the supply side
of the economy, in particular those relating to the cost of
production, become critical. This is why squeezing the cost
of production, both in terms of labour cost and in terms of
employers' taxes and insurance contributions, is so
important. But, squeezing the cost of production involves a
drastic reduction in statism.

Thus, it can easily be shown that the post-war expansion of
statism has led to a long-term rise in the cost of
production: directly, because the expansion of the welfare
state meant a growing burden on employers' contributions and
taxes;[26]
indirectly, because, under the conditions of near-full
employment that prevailed during the statist phase of the marketization process, organised labour could press
successfully for wage rises that significantly exceeded
productivity increases. This became a problem particularly
painful for those controlling capitalist production in the
period 1968-73, when a massive strike movement, not actually
controlled by the trades union bureaucratic leadership, led
to a fast rise in wages and a corresponding encroachment of
profits.[27]

So, the cumulative effect of not letting the labour market
free to determine the levels of wages and employment, as the
market economy requires, was the crisis of the early 1970s.
The crisis, contrary to the usually advanced short-termist
view, was not mainly due to the oil crisis but to a
long-term structural change: the fact that the degree of
internationalisation of the market economy achieved by then
was not compatible with statism anymore. This was indicated
by the following facts:

first, the nation-state's effective control of the economy
had become almost impossible, as a result of the relatively
free movement of commodities and the high mobility of
capital that the booming Euro-currency markets etc have (de
facto) introduced. The combined effect of these two
developments was to leave multinational corporations free to
undermine those national economic policies which were
incompatible with their own objectives;

second, the expansion of statism itself had certain
built-in elements (I can not expand on this topic here) that
were inevitably leading to an inflationary crisis.

So, at the beginning of the 1970s, two parallel trends were
at work: the inflationary crisis and a new trend of rising
unemployment. The latter trend was mainly due to structural
unemployment, as a result of technological changes (mainly,
the information revolution) that led to a drastic fall in
the number of workers in manufacturing[28]―a fact with important implications on the strength and
significance of trade unions and social-democratic parties.[29]
The parallel conjunctural rise in unemployment, due to the
counter-inflationary measures taken by governments in their
attempt to cope with the effects of the oil crisis, simply
exacerbated the situation.

Thus, the economic crisis of the early 1970s, which was
aggravated by the collapse of the Bretton Woods system and
the return to the uncertainties of flexible currencies, led
to the rise of the neoliberal movement. This movement, which
first emerged among the economists in academia (the Chicago
School, resurrection of Hayek and so on) and later spilled
over among professional politicians, especially in the
United Kingdom and the United States, represented a powerful
attack against social-democratic statism. Statism (in the
form of nationalisations, full employment policies and the
welfare state) was accused of leading to a tripartite system
of economic power (state, trades unions and capital) which
was undermining private capital's hegemony. The ultimate
neoliberal aim was, therefore, to enhance the power of those
controlling the economy, through the drastic reduction of
society's control over the market. The main methods used to
achieve this aim have been the following ones:

Deregulation and liberalisation of markets.

Privatisation of state enterprises.

Reduction of the welfare state into a safety net and
parallel encouragement of the private sector's expansion
into social services.

Redistribution of the tax burden in favour of high income
groups, at the expense of low and mid-income groups.

The neoliberal consensus has very important implications at
the economic, political, social, ideological and cultural
levels. At the economic level, the new consensus should not
be taken to mean that the state has no more economic role to
play. One should not confuse liberalism/ neoliberalism with
laissez-faire. It was, anyway, the state itself that
historically has created the system of self-regulating
markets and some form of state intervention has always been
necessary for the smooth functioning of the capitalist
system. The state is called today to play a crucial role
with respect to the supply-side of the economy and, in
particular, to take measures to improve competitiveness and
to train the working force to the requirements of the new
technology. Therefore, the type of state intervention that
is compatible with the marketization process not only is not
discouraged but, instead, it is actively promoted by the
neoliberal consensus, especially by the "progressive"
elements within it (Clinton administration,
social-democratic parties in Europe). So, it is not true
that the neoliberal consensus has killed off the baby of the
social-democratic consensus, i.e. the mixed economy, as it
is usually assumed. In fact, it did something worse. It
redefined the content of the mixed economy so that it can
better serve the interests of the economic elite and
reproduce, on the threshold of the twenty-first century, the
same conditions of inequality and social injustice that
prevailed in the beginning of the nineteenth!

However, it should be stressed that today it is not the
nation-state as such that is called to play the above role
with respect to the supply side of the economy. The
internationalised phase of the marketization process implies
the creation of huge economic blocks, within the context of
which the economic role of the individual nation-state is
being progressively downgraded in favour of supranational
institutions. This applies, in particular, with respect to
the EEC, where the relevant process has already begun, but
it also applies with respect to the North American Free
Trade Agreement (NAFTA) and the still informal Far Eastern
block (Japan, Korea, Taiwan, Malaysia, Thailand, Hong Kong,
Singapore).

In fact, the same economic aims that have brought about the
neoliberal consensus have, also, led to the creation of
these blocks. The basic aim is the improved competitiveness
of the sections of capital that are based in each block.
This improvement is expected to come about through the
enlargement of the "domestic" goods market and that of the
capital and labour markets. As regards the goods market,
first, the larger size makes improvements in productivity
much easier, mainly, because of the possibility of pooling
resources on research and development. Second, as regards
the capital and labour markets, the possibility of greater
movement of labour and capital creates additional
opportunities to squeeze the cost of production and in
particular the cost of labour. This is because, contrary to
what orthodox economic theory suggests, neither free capital
movement nor free movement of labour eliminate wage
differentials.[30]
Instead, mobility of capital creates opportunities to invest
in areas of low cost, whereas mobility of labour puts
pressure on the wages of high-income countries.

In Europe, in particular, the complete liberalisation of the
goods markets within the EEC block, combined with the
liberalisation of labour and money markets, creates ―for the
first time in history―
a vast economic area where an
automatic system, similar to the Gold Standard system, could
now function successfully. Indeed, this is the main aim
behind the European Economic and Monetary Union (EMU). If we
substitute the European Currency Unit (ECU), i.e. the
projected common EEC currency, for gold, Europe will operate
under a contemporary Gold Standard system when the EMU is
completed. The reason such a system is now in a better
position to function more successfully than in the past is
that the basic factor that led to the collapse of the Gold
Standard system has been eliminated, that is, the various
restrictions on the movement of goods, labour and capital.
Such restrictions, as we have seen, represented society's
self-protection mechanisms against its marketization and led
to the near collapse of the market economy itself. Since the
neoliberal consensus has eliminated most of these
restrictions, a historic opportunity has been created for
the marketization process to be completed.

The present internationalised phase stands therefore a much
better chance of success than the first marketization phase
in the 19th century. In fact, it is possible that by the end
of the century all four institutions that, according to
Polanyi, are needed for the marketization of the economy
will be in place. These are the self-regulating market, the
balance-of-power system, the liberal state and the
international Gold Standard. At present, statism is in
retreat everywhere and many state regulations with respect
to the market have been abolished. In Europe, in particular,
the development at the end of the century of the independent
European Central Bank, which will replace the individual
central banks, will mark, in effect, the end of the
nation-state at the economic level. Second, a
balance-of-power system is being established, within the
framework of a United Nations controlled by the major
capitalist countries. Third, the liberal state is presently
omnipresent and virtually unchallenged. Finally, a kind of
European gold standard mechanism, in the form of a common
currency, may reasonably be expected to be in place by the
end of the century.

In concluding, it is therefore obvious that the rise of
neoliberalism is not a conjunctural phenomenon, as social
democrats present it, but that it represents the completion
of the marketization process that was interrupted by the
rise of statism. The fact that neoliberal policies are
supported today by both conservative and social-democratic
parties, in government or in opposition, and that the basic
elements of neoliberalism have been incorporated into the
strategies of the international institutions which control
the world economy (IMF, World Bank) as well as into the
treaties that have recently reformed the EEC (Single Market
Act, The Maastricht Treaty) makes it plainly evident that we
are faced with a neoliberal consensus that has replaced the
defunct social-democratic consensus. Furthermore, the
breakdown of "actually existing socialism" in the East and
the parallel collapse of social democracy in the West (as a
result of the shrinking of its electoral clientele) have
created the political conditions for the completion of the
marketization process. This does not just mean a return to
pure nineteenth-century liberalism. It means the
maximisation of the role of the market and the minimisation
of social controls over it to secure maximum "efficiency",
in the sense of profits and growth.

So, after the failed attempt to introduce a self-regulating
economic system in the last century, a new synthesis is
attempted today. The new synthesis, although it has the same
objective as before, attempts to avoid the extremes of pure
liberalism by combining essentially self-regulating markets
with various types of safety nets and minimal controls that
do not affect the self-regulation process. In the present
internationalised phase of the marketization process, the
need to minimise the socioeconomic role of the state is no
longer a matter of choice for those controlling production.
It is a necessary condition for survival. This is
particularly so for European capital that has to compete
with capital blocks, which operate from bases where the
social-democratic tradition of statism has never been strong
(the United States, the Far East). However, even at the
planetary level, one could seriously doubt whether it is
still possible, within the context of the market economy, to
enhance the institutions of civil society. Granted that the
fundamental aims of production in a market economy are
individual gain, economic efficiency and growth, any attempt
to reconcile these aims with an effective "social control"
by the civil society is bound to fail since, as historic
experience with the statist phase has shown, social control
and market efficiency are irreconcilable objectives.[31]
By the same token, one could reasonably argue, any effective
control of the ecological implications of growth is
incompatible with the competitiveness requirements that the
present phase of the marketization process imposes.

So, what are the chances ―if these trends persist― of
overcoming the crisis of the growth economy? The presently
dominant strategy attempts to overcome the crisis on the
basis of policies emanating from the liberal credo of
freeing the market forces and minimising social control,
i.e. further marketization. However, this strategy, in fact,
is nothing less than the rational organization of
inequality. This becomes obvious by the fact that no
dimension of the crisis can be resolved by further
marketizing the economy.

Thus, as regards, first, the economic crisis, in the sense
we defined it, the enhancement of the marketization process
could confidently be expected to aggravate the crisis, since
it is bound to further widen the North-South gap, as well as
the gap between the privileged and the non-privileged within
the North and the South. As regards, second, the ecological
crisis, the strategy of freeing the markets inevitably leads
to a deepening of this crisis, as the historical experience
of the last 200 years has shown when the rise of the market
economy and the subsequent growth economy was followed by
the greatest ecological disaster in the history of
humankind. Finally, as regards the social crisis, it is
unavoidable that the marketization of society would further
undermine traditional, as well as community, values and
deepen this crisis.

At the same time, concentration of political power cannot be
reduced through the decentralization of economic power,
supposedly brought about by the freeing of markets,
deregulation and so on. On the contrary, minimizing social
controls on the markets further reinforces economic
concentration ―which is simply a by-product of the market
economy― whereas, at the same time, it leads to
supranational forms of political concentration that
correspond to the supranational forms of economic
concentration already established. In fact, the trend
towards the formation of a federal super-state in Europe,
actively supported by neoliberals and social-democrats,
constitutes a characteristic example of political
concentration supplementing economic concentration.

C. The need for an alternative form of social organisation

Finally, coming to the last question I asked at the
beginning, whether we should create alternative forms of
social organisation in order to overcome the crisis, I think
that today few doubt, and research has conclusively shown,
that participation should infuse any model of social change,
i.e. that social change should at leastbe
initiated at the local level. The real issue therefore
is not whether the participatory model is desirable but
whether any real participation is feasible within the
present institutional framework, which is defined at the
political level by representative forms of democracy and at
the economic level by the internationalised market economy
and its institutions (TNCs, IMF, World Bank etc.). i.e. the
institutional framework which tends to develop, as we saw
above, into a series of networks of city-regions within
federated structures of political power. In short, the real
issue is decentralisation versus remaking society.

In this context, it is interesting to note that today both
the proposals for decentralisation and those to remake
society are centered at the community level. In view of what
was said before, this is not of course a surprising
development, as it just represents the inevitable
consequence of the collapse of socialist statism on the one
hand and the failure of "actually existing capitalism" on
the other. A failure that is both economic, as shown by the
fact that this system cannot even meet the basic
needs of at least 20% of the world's population,[32]
and ecological, as the advancing ecological disintegration
reveals. Thus, a new consciousness is emerging among radical
movements in the North and the various community movements
in the South ―a consciousness, which ascribes the basic
cause for the failure of both capitalism and socialism to
the concentration of power. It is therefore becoming
increasingly realised that social and individual autonomy[33]
can only be achieved in the context of direct and economic
democracy, i.e. "a structure and a process that, through
direct citizen participation in the decision-taking and
decision-implementing process secures an equal distribution
of political and economic power among citizens".[34]

However, the rebirth of democracy is today possible only at
the community level (the municipality or its subdivisions).
It is only at the community level that the conditions that
would make direct and economic democracy possible could be
fulfilled, i.e. economic self-reliance, municipalization of
economic resources and democratic allocation of goods and
services among the confederally organized communities; it is
also at the same level of confederated communities that the
preconditions for an ecological society can be met.

The community is, of course, a notoriously disputed ―some
even say anachronistic―
concept. However, I would agree with
David Clark that community could never be destroyed or
civilisation itself would collapse and that the real issue
is how to define and operationalise the concept of community
so that it would be useful in the urbanised, technological
and highly mobile society of today. A useful starting point
is David Clark's definition of the concept of community,
which is defined in terms of what he calls "ecumenicity"
(i.e. a sense of solidarity that enables people to feel
themselves part of and not hostile towards wider society)
and autonomy (i.e. a sense of significance that enables
people to feel they have a role to play in the social scene,
a role that is defined by rules that members of the
community choose themselves and feel free to modify).[35]

However, the ecumenicity and autonomy elements can only be
described as the necessary conditions defining
community relations. I think that community members cannot
have a real sense of solidarity and especially a real sense
of significance, unless a third element is present, which I
call the democracy element. The democracy element, which
rules out the concentration of political and economic power,
is in fact the sufficient condition for any true
community. Historically, this has always been the case.
Thus, as Michael Taylor[36]
has shown, drawing on the experience of stateless primitive
societies, peasant communities and "intentional" (utopian)
communities, a community requires rough economic equality,
as well as relations between its members that involve
reciprocity (mutual aid, cooperation, sharing) and that are
direct (i.e. unmediated by representatives, leaders,
etc.) and many-sided.[37]
So, taking into account all these three elements
(ecumenicity, autonomy, democracy) we may end up with a
definition of community like the one recently put forward by
Murray Bookchin as "a municipal association of people
reinforced by its own economic power, its own
institutionalization of the grass roots, and the confederal
support of nearby communities organized into a territorial
network on a local and regional scale".[38]
I think that starting from a definition of community, like
the one given by Bookchin, we could develop a model of a
community-based economy and society. Unfortunately, I can
not expand further this topic here and I can only refer
those interested to some recent bibliography[39]
on the matter.

It is, I hope, obvious that the community has been used
above as the fundamental social, political and economic unit
on which a new type of society could be founded, i.e. a
third social system beyond socialist statism and neo-liberal
capitalism. In this context, the new radical proposals for a
community-based society represent a synthesis of the
democratic tradition founded in classical Athens (direct
democracy), the socialist tradition (economic democracy) and
green radicalism (ecological society), and, potentially,
they offer the only realistic way out of the present
multidimensional crisis.

However, as I hinted above, apart from radical proposals to
remake society, on the basis of a new community-based social
system, there are also community-based proposals to
decentralise society, in the sense of empowering communities
at the expense of the centre. Today, the concept of
community has become fashionable again. Religious "communitarianism",
with its religious notion of "community", competes with
statist communitarianism, where the need to revive the
"community" is used as a means to fight crime and strengthen
the security state (see e.g. Clinton's 1994 "State of the
Union" address). Similarly, parts of the old
social-democratic movement, like, for instance the British
Labour Party, turn today to various forms of "communitarianism",
in the sense of empowering communities as counter-balancing
forces to the market and the supranational federal forms of
statism presently developing. It is obvious that these
fashionable notions of community have nothing to do with the
concept of community that a community-based society has to
develop, because religious or statist definitions of
community take for granted the very institutional framework
that a community-based society has to transcend.

Similar arguments could be put forward against the type of
communitarianism presently expanding, particularly in North
America and Britain, in the form of what is usually called
"Community Economic Development" (CED). This involves a
strategy of gradual removal of land, labour and capital from
the market economy (through the establishment of Community,
Land Trusts, community financial institutions, community
enterprises etc.) with the double aim to create a community
culture and to make private firms and the state socially
responsible. However, community economic development,
although useful with respect in particular to its first
objective, could not seriously challenge the present
concentration of political and economic power, as supporters
of it admit:

New forms of economic activity and institutions created in
the community will never be adequate, within an economy
dominated by private enterprise, to generate enough jobs
and wealth at a local level to compensate for the
consequences of economic centralisation outside of the
community...Since communities do not control in any direct
way economic resources, partnerships with both government
agencies and representatives of busines have been accepted
as inevitable by CED activists in order to secure both
recognition and resources. These are tricky relationships
because of the inequality of power.[40]

It is therefore obvious that CED, by not aiming at
establishing a political and economic power base at the
community level, (which could only be achieved, as the
supporters of a community-based society argue, by contesting
local elections in order to develop "a new public sphere
―and in Athenian meaning of the term, a politics―
that grows in tension and ultimately in a decisive conflict
with the State"[41]), could easily end up as another attempt for radical
decentralisation. But, radical decentralisation, within the
existing institutional framework, is neither feasible nor
desirable. It is not feasible, because, in the context of
the present internationalised phase of the marketization
process, any attempt to create real counterbalancing centres
of power would fail, unless these centres of power are
compatible with the logic and dynamic of competitiveness. It
is not desirable, because the problem of democracy today is
not just how to force the present centres of political and
economic power to delegate some of their power to local
centres of power, which would simply reproduce at the local
level the concentration of power at the centre. The problem
is how we can create new forms of social organisation that
do not presuppose centres of power at all, but the
dispersion of power to all citizens, i.e. true democratic
forms of organisation and a return to the classical meaning
of Politics, in the context of which "neither rule nor
being ruled exists".[42]

[2]
See the pioneering work of Karl Polanyi, The Great
Transformation: the Political and Economic Origins
of Our Time (Boston: Beacon Press, 1944/1957).

[3]
The logic of growth has been adequately analyzed
from both the liberal and the Marxist perspectives.
For further analysis, from the ecological
standpoint, see, e.g., Michael Jacobs, The Green
Economy (London: Pluto Press,1991), pp. 3-49. Also,
the chapter entitled "Why capitalism needs growth"
in R. Douthwaite's book is useful, despite the
shortcomings of the book in general, mainly due to
the deep ecology approach that it adopts (Richard
Douthwaite, The Growth Illusion (Devon, UK:
Resurgence, 1992), pp. 18-32.

[8]
As Sean Sayers observes, quoting from Marx's Capital
vol. 3 and Grundrisse, "Marx regards the immense
expansion of production to which capitalism has led
as its progressive and 'civilising' aspect. Sean
Sayers, "Moral values and progress", New Left Review,
No. 204 (March-April 1994), pp. 67-85.

[11]
The terms "socialist" and "capitalist" are simply
used in order to distinguish various types of the
growth economy on the basis of the criterion of
methods of allocating economic resources. For a
discussion of the nature of the regimes of "actually
existing socialism", which can surely not be
characterised as socialist even by the standards of
classical Marxism, see Takis Fotopoulos, Dependent
Development: the case of Greece (Athens: Exantas
Press, 1985 & 1987), ch. A.

[13]
In Britain, for instance, it took 30 years for the
crime rate to double, from 1 million incidents in
1950 to 2,2 million in 1979. However, in the past
ten years, the crime rate has more than doubled and
exceeded the 5 million mark in 1992; at present, it
is estimated that it has topped 6 million. R.
Reiner, The Observer (15 Sept. 1991) and J. Young,
The Guardian (1 Feb. 1992).

[14]
Such views are expressed, e.g., by Cornelius
Castoriadis, Political and Social Writings
(Minneapolis: University of Minnesota Press, 1988),
vols. 1-2, as well as by Rudolf Bahro, The
Alternative in Eastern Europe (London: Verso,
1978).

[16]
200 years ago, the average per capita income in the
rich countries was only one and a half times higher
than that in poor countries. P. J. McGowan & B.
Kurdan, "Imperialism in World System Perspective",
International Studies Quarterly, Vol. 25, No.
1 (March 1981), pp. 43-68. In 1900, it was six times
higher and in 1952/54 8.5 times higher, whereas by
1970 it was 13 times higher. Paul Bairoch, The
Economic Development of the Third World Since 1900
(London: Methuen, 1975), pp. 190-2. Since then, the
gulf has become even wider and by 1991 the average
per capita income of the 19 richest countries in the
OECD was 21 times higher than that of countries with
low and medium income. World Bank, World
Development Report1993, Table 1.

[17]
Calculations based on the, World Development
Report 1993, World Bank, Tables 1 and 5. Even
now, for the present world population to reach the
per capita energy consumption levels enjoyed by the
19 richest OECD countries, the annual world
production of energy should quadruple (or increase
six times, for everybody to enjoy the American
consumption standards).

[18]
Ted Trainer, Developed to Death (London: Greenprint, 1989), p. 120. According to Ted Trainer,
if we try to globalize the present Western energy
consumption standards relying, instead, on nuclear
energy, then, on the basis of a world population
reaching 11 billion in the next century, we should
need to build 200,000 giant nuclear reactors, i.e.
one thousand times the world's present nuclear
capacity!

[23]
Polanyi derives the same conclusion as regards the
two types of statism, although within the context of
a different problematic. Polanyi, The Great
Transformation, p. 245.

[24]
Thus, whereas import penetration (imports as a
percentage of production of manufacturing plus
imports) within Europe was only 6% in 1937 and 1950,
it increased to 11% in 1963 and 17% in 1971
significantly higher than the 1913 level of 13%.
Philip Armstrong et al., Capitalism Since World
War II (London: Fontana, 1984), Table 10.3, p.215.

[25]
The average annual rate of growth of imports in the
group of the 7 more advanced capitalist countries
increased by almost 40% between 1965-1980 and
1980-90 (from 3.9% in 1965-80 to 5.4% in 1980-90).
World Development Report 1992 (New York: World
Bank), Table 14, p. 244.

[26]
In Britain, for instance, total taxes as a
proportion of company profits (excluding national
insurance contributions) increased from about 44% in
1955-59 to 48.6% in 1967-70. Andrew Glyn & Bob
Sutcliffe, British Capitalism,Workers and
the Profits Squeeze (London: Penguin, 1972),
Table F.1, p. 260.

[27]
Actual post-tax real wages and productivity in
advanced capitalist countries increased at about the
same rate from 1960 to 1968 (4%), but in 1968-73,
the former increased by an average of 4.5% versus a
rise of 3.4% in the latter. Armstrong et al.,
Capitalism Since World War II, Table 11.10, p.
260. As a result, the share of profits in business
output fell by about 15% in 1968-73. Armstrong et
al., Capitalism Since World War II, p. 246.

[28]
In the `Group of 7' biggest capitalist economies
(the United States, Japan, Germany, France, the
United Kingdom, Italy, Canada), the proportion of
the active population employed in manufacturing fell
almost by a third between 1972-73 and 1989-90, from
an average of 32% in 1972-73 to 22% in 1989-90.
International Labour Organization (ILO), Yearbook
of Labour Statistics (Geneva: ILO, various
years).

[29]
In the United Kingdom, for instance, the proportion
of the active population in non-manual work
increased from 12.8% in 1951 to 31.9% in 1978. Nick
Bosanquet, After the New Right (London:
Heinemann, 1983), p. 126. As a result of these
trends, the structure of the British electorate
changed drastically, and the proportion of the
manual working class fell from a half to a third of
the electorate within a 20-year period (1964-83).
Bob Jessop et al., "Popular Capitalism, Flexible
Accumulation and Left Strategy", New Left Review
(Sept.-Oct. 1987).

[30]
For instance, in the EEC, despite the conditions of
free trade which have been established for a number
of years, the average gross hourly earnings of
industrial workers (in purchasing power terms) on
the periphery (Greece, Portugal) are half of those
at the centre and there are no significant trends to
close the gap. Eurostat, A Social Portrait of
Europe (Luxembourg: Statistical Office of the
European Communities, 1991), Table 6.13, p. 72.

[32]
According to the latest (1994) report of the
International Labour Office (ILO), in 1993, 1.1
billion people lived in poverty conditions. An
earlier World Bank report classified one third of
the South's population as poor. World Development
Report 1990, p. 28.

[33] The
term "autonomy" is used not in the usual
Anglo-American sense of individual "liberty", in its
liberal John Stuart Mill meaning, but in the ancient
Greek sense of "autos-nomos", i.e. to give to
oneself one's laws. See Cornelius Castoriadis,
Philosophy, Politics, Autonomy (Oxford
University Press, 1991), ch. 7.

[37]
Michael Taylor also shows conclusively why the
liberal arguments of the `anarcho-capitalist school'
(F. Hayek, R. Nozick and others), that no equality
would survive for long without state interference,
are logically and historically invalid and that, in
fact, community is a necessary condition for the
maintenance of an approximate equality; Michael
Taylor, Community, Anarchy, and Liberty, pp.
95-104.